The Group Captive System: The Regulations!

<p><i>Explanation.- (1) For the purpose of this rule.</i></p><p><i>a.     “Annual Basis” shall be determined based on a financial year;</i></p><p><i>b.     “Captive User” shall mean the end user of the electricity generated in a Captive Generating Plant and the term “Captive Use” shall be construed accordingly;</i></p><p><i>c.      “Ownership” in relation to a generating station or power plant set up by a company or any other body corporate shall mean the equity share capital with voting rights. In other cases ownership shall mean proprietary interest and control over the generating station or power plant;</i></p><p><i>d.     “Special Purpose Vehicle” shall mean a legal entity owning, operating and maintaining a generating station and with no other business or activity to be engaged in by the legal entity. ‘</i></p><p> </p><p> </p><p>Yes, it is true that the Electricity Rules also does not call it as Group Captive! That has become a jargon more under use, rather than defined legally!</p><p> </p><p>But it does say, what is captive and what is not Captive.</p><p> </p><p>Captive Generating Plant or CGP has to satisfy certain norms to become a CGP. And these norms are the following:</p><p> </p><p>1.     All the captive users together shall own 26% of the equity in the ‘Power Plant’. Now, there are many combinations that could make this statement very confusing. Power plant may not be the only business of the company that promotes it. Should I hold 26% of the company that promotes it to become a captive user? Or should I hold shares proportional to my power consumption from that specific power plant?</p><p> </p><p> </p><p> </p><p>(To be continued…)</p>